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Sony's Game division reports full year loss

Sony's Game division reports full year loss

Wed 14 May 2014 8:15am GMT / 4:15am EDT / 1:15am PDT
PublishingDevelopment

Launch of the PS4 drags on the bottom line despite sales performance of the hardware

Sony Corp's Game division made a loss in the full fiscal year as it struggled to get clear of the cost of launching the PlayStation 4.

In the year ended March 31 2014, it earned 979.2 billion in revenue ($9.5 billion), up 38.5 per cent year-on-year thanks to strong sales of the PlayStation 4. But it still lost 8.1 billion ($78 million), which Sony attributed to PS4 launch costs and the closure of several Sony Online Entertainment games.

In the fourth quarter, revenue was 264 billion ($2.6 billion), a 38 per cent increase year-on-year. However, the division made a 11 billion Q4 loss ($108 million), larger than the 2 billion it lost in the prior year quarter.

Combined sales of the PS4 and the PS3 were 14.6 million, down from 16.5 million in the previous year (though the prior year included sales of the PS2). According to Sony's own information, the PS4 had sold 7 million units just after the reporting period closed at the end of March, indicating that the PS3 made up the remainder. Sony expects to sell a combined 17 million units of its consoles in the year ending in March 2015.

Hardware sales of its handheld systems were altogether less impressive. In total, the PS Vita, PSP and PS Vita TV sold 4.1 million units across the entire year, down from 7 million units. In Q4 of the fiscal year, the health of Sony's handheld line seemed even more negative, with all three products selling just 700,000 units in total, down from 1.3 million year-on-year.

That downward trend is expected to continue in the coming year, with all three products forecast to sell a combined 3.5 million.

Software sales showed clear improvement, with the company banking 374 billion ($3.7 billion) in the fiscal year, up from 266 billion, and 91 billion ($893 million) in Q4, up from 79 billion.

For the year ending March 31 2015, Sonys rebranded Game & Network Services division is expected to earn 1.22 billion in revenue, and turn a small profit of 20 million.

Despite the lingering losses, Sony's Game division remains a relatively bright spot on an otherwise troubling balance sheet. The company reported a 14.3 per cent increase in revenue for the fiscal year, 7.77 trillion ($75 billion). But it made a 128 billion loss ($1.24 billion), versus a profit of 41.5 billion last year.

12 Comments

Tom Keresztes Programmer

692 348 0.5
Looking forward to the dozens of "Sony should leave the console business soon, go 3rd party and drop the Vita within the next 36 hours" articles, but then Sony isn't Nintendo.
Sony does not really have profitable businesses apart from the consoles.

Posted:6 months ago

#1

Nicholas Pantazis Senior Editor, VGChartz Ltd

1,020 1,467 1.4
The most troubling part of this to me is the even lower (and likely still extremely generous) forecasts for the Vita for next year. They clearly have no plan to support it or improve its sales in any way.

Posted:6 months ago

#2

Nick Wofford Hobbyist

180 190 1.1
@Nicholas
I agree. 3.5M units combined among Vita, Vita TV, and PSP. That's just abysmal, if I'm being generous. I expect the Vita to be relegated to online orders only before the holidays. Retailers can't be expected to continue stocking it.

Posted:6 months ago

#3

Jim Burns Research Asisstant

49 85 1.7
@Christian

Nintendo also has the 3DS and sells way more software than Sony could dream of.

Posted:6 months ago

#4

Quincy Ward Studying Computer Science, University of Arkansas

14 22 1.6
@Christian Keichel
Thanks for this post I was just about to look up what the other divisions were doing.

Edited 1 times. Last edit by Quincy Ward on 15th May 2014 3:38pm

Posted:6 months ago

#5

Benjamin Kratsch Freelance Journalist, GLP Media

18 5 0.3
Sony is a company, that is always going for the big risks. Maybe it would be better to focus more on money machines like "Uncharted" and less on games like "Beyond", even though I loved this experience. They should go the activision route to save their entire company. It's worrying that one of the biggest hardware companies of the world (tvs, smartphones, cameras, ps4) could be going out of business. It's not easy especially in the tv space - we have all those fancy 4k tvs in the market, but there is no content. There is no new film medium, that could bring you 4k and it will take another console generation to fully support 4k. That said: tough to sell the premium price tvs, people are more buying within the low price segment under 1000 dollar, where they hardly make a lot of profit with.

Posted:6 months ago

#6

Greg Wilcox Creator, Destroy All Fanboys!

2,194 1,170 0.5
I'd bet a quarter that had the Vita been able to download patches and updates for PS3 and PS4 games AND be used as a remote play device from the very beginning for every game, it would have done better from launch. That and those damn expensive memory cards are the only things I don't like about the thing. Otherwise, I've been a Vita owner since day one through all the ups and downs. It's not a bad device at all and i think a lot of the hesitation towards it comes from it not being as versatile as it needed to be from day one.

Hell, if you design something like this that's SUPPOSED to last as a portable, you make it as flexible as possible from day one (yup, down to allowing for users to expand memory at an inexpensive option because each user has his or her own storage needs). Anyway, I don't think it's "dead" as a handheld, but it's not doing what it needs to and that's a shame...

Posted:6 months ago

#7

Benjamin Kratsch Freelance Journalist, GLP Media

18 5 0.3
Pretty sure they wanted to go with the old business model. Remember Microsoft getting a ton of money out of new hard drives for the first 360 model. And with the wifi dongle. And with additional controllers. But yeah, that's the way of the dinosaur. Always buying new and ridiculous expensive memory sucked from day one and got them a pretty bad reputation for an excellent system.

Posted:6 months ago

#8

Greg Wilcox Creator, Destroy All Fanboys!

2,194 1,170 0.5
Good point, Benjamin, although this memory card pricing issue was a big pain in the ass back in the PSP days. I was floored about a year or so back when I needed a new Memory Stick Duo for my PSP at how much they'd fallen in price in some places while others were still trying to get top dollar for them. I ended up buying a lot of 5 used ones of different sizes (1GB up to 4GB for) about nine dollars and not only did they all work fine, a few had saves files, demos and even complete games on them that weren't in the description (the person selling them picked them up cheap at a yard sale thinking they were SD cards for his old digital camera!).

Also, this old business model thinking is going to kill one of these companies one day, that's for sure. Well at least in terms of storage. Some of us still want the choice of physical or digital media, not one or nothing. Hopefully that point has been made clear by buyers...

Posted:6 months ago

#9

Andrew Goodchild Studying development, Train2Game

1,254 421 0.3
The weirdest thing regarding Sony's crazy Vita memory card policy is it flies in the face of the fact that they acknowledged the importance of allowing you to install a generic 2.5" had on the PS3. If people have to pay more for storage, they will buy less games and dlc, and I know plenty of people who bought a lot less digital content on 360 for that reason.

Posted:6 months ago

#10

Greg Wilcox Creator, Destroy All Fanboys!

2,194 1,170 0.5
*DING!* Andrew, you nailed it. When I was showing my Vita off, not one person who liked it had anything good to say about the cost of those memory cards when the subject came up and I certainly couldn't defend the 'proprietary format' argument because I'd rather spend that memory card money on more games which should have fit onto some sort of built in or user-expandable storage.

Posted:6 months ago

#11

Adam Campbell Associate Producer, Miniclip Ltd

1,199 1,013 0.8
Sony are still on the right track. They're starting to elimiate expensive, loss making parts of the business and putting an end to some of their earlier technological crusades, which did little more than increase the bills.

Posted:6 months ago

#12

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